The Cyprus Securities and Exchange Commission (CySEC) is taking substantial steps to increase client protection with its new regulations.
The regulator is settee introduce a new set of requirements that limit
the maximum available leverage to clients to 1:200 for experienced
traders and 1:100 for novice clients of retail brokerages.
news comes as the European regulators have continued to ramp up
pressure on the industry to encourage more responsible trading from
clients. The French AMF has introduced guaranteed stop loss requirements
as part of its advertisement ban on financial services, while the
German BaFin regulator mandated negative balance protection.
Exness has been offering very high leverage to
its clients, with the latest step taken by the company introducing
‘unlimited’ leverage. After the company has been offering tiers of
leverage including 1:1000 and 1:2000, the firm introduced its
‘unlimited’ offering in March last year.
The changes are
set to take effect on the 31st of January 2017, introducing a default
tier of 1:50 with experienced traders allowed to change the levels to a
higher ratio. Clients that do not agree with the new terms and
conditions are asked to send their requests for account closure to the
broker’s support email.
Exness is outlining in its
statement: “The new measures introduced by CySEC are an important step
toward maintaining an environment of trust and security for clients to
trade within. As an EU regulated broker who has always adhered to the
highest regulatory standards, we align ourselves fully with these new
Higher leverage is typically closely
correlated with increased client losses, according to studies conducted
by various online brokers. The higher the risks that a client takes with
the balance available on the account, the higher the probability for
the account to hit a margin call which results in the automatic closure
of open positions.